2nd UPDATE: Taiwan Government To Invest Up To NT$30 Billion In DRAM Cos

Taiwan's government plans to invest up to NT$30 billion in one to two local dynamic random access memory chip makers, Jung-Chiou Hwang, vice minister of economic affairs, said Tuesday.

The investment will go to the company or companies that can carry out restructuring plans to enhance the DRAM industry's competitiveness, he said.

His comments come after the government said earlier Tuesday the DRAM makers that will be eligible for such investment include companies that can gain access to foreign firms' intellectual property rights, propose plans to jointly develop next-generation technologies with foreign partners, and consolidate through mergers and acquisitions.

The government will set up a committee to review DRAM makers' proposals. Companies should submit their applications within three months, the vice minister said.

Powerchip Semiconductor Corp. (5346.OT) is considering applying for the government investment, company spokesman Eric Tang said Tuesday.

"Powerchip meets the conditions the government has set," Tang said. Powerchip is Taiwan's second-largest DRAM maker by revenue after Nanya Technology Corp. (2408.TW).

Global DRAM makers have suffered from consecutive quarterly losses since last year after a supply glut drove chip prices well below their manufacturing costs. Prices have slowly rebounded this year after companies cut production and capital expenditure budgets. Many have sought help from their governments to ride out the DRAM sector's worst downturn since 2001.

The Taiwan government said in March it will set up a new chip company called Taiwan Memory which will be tasked with developing next-generation chip technologies to increase the island's competitiveness in the DRAM sector. In April, Taiwan Memory chose Japan's Elpida Memory Inc. (6665.TO) as its technology partner. At the time, Minister of Economic Affairs Chii-ming Yiin said the government may invest less than NT$10 billion in Taiwan Memory.

Yiin said earlier this month that Formosa Plastics Group submitted a proposal seeking NT$20 billion to NT$30 billion for its memory-chip units, Nanya Technology and Inotera Memories Inc. (3747.TW).

Inotera is a joint-venture between Nanya and U.S. chip-maker Micron Technology Inc. (MU).

-By Jessie Ho, Dow Jones Newswires; 88622 502-2557; [e-mail]